$1.8 billion of tax cuts for business

The Government is assisting business to sustain the high rates of productivity that will be needed to maintain Australia’s economic growth in the years ahead. By relieving business of tariffs that increase their costs and recognising other legitimate expenses under the tax law, the Government is facilitating more investment and better investment decisions.

Removing 3 per cent tariff on business inputs

The Government will remove from 11 May 2005 the 3 per cent tariff applying to business inputs where no substitutable goods are manufactured in Australia.

The removal of this tariff will reduce costs for affected businesses by $1.3 billion over five years from 2004-05, and help increase the international competitiveness of Australian business.

Recognising blackhole expenditures

From 1 July 2005, business will be able to obtain tax relief for a range of ‘blackhole’ expenses (including certain pre-business costs) currently not recognised in the tax law. The changes will facilitate investment by ensuring business can claim tax relief for a wider range of legitimate expenses. This measure will cost $205 million over the period 2006-07 to 2008-09.

Assisting small businesses

The budget provides $29 million to continue the Small Business Assistance Programme and $9 million for the Small Business Mentoring and Succession Programme. In addition, $37 million will be provided to continue the Business Entry Point website, providing simple access to information for Australia’s small business sector and government stakeholders.

This builds on substantial initiatives announced since the last budget, including the entrepreneurs’ tax offset ($1.2 billion over three years) and improved access to the Simplified Tax System ($361 million over four years).